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Extended Stay agrees to $6B deal; Google to invest $7B in offices, data centers

Corporate America Not Likely To Unwind COVID-19 Debt Buildup Despite Credit Hits


M&A rebound sparks optimism for near-term deal activity


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Six trends shaping the industries and sectors we cover in 2021

Extended Stay agrees to $6B deal; Google to invest $7B in offices, data centers

S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.

The number of active real estate loan originators fell only slightly during the COVID-19 pandemic, but the count of hotel lenders fell by 39%, according to Real Capital Analytics data.

Competition in real estate lending markets grew steadily from 2011 to 2017 in the recovery from the last recession, giving investors seeking to acquire or refinance properties more funding options, the firm's senior vice president, Jim Costello, wrote in a March 18 note.

From the end of 2019 to the end of 2020, a period that roughly coincides with the pandemic's effect on the U.S. economy, lodging was the only property type that posted a sharp decline in lender count, with lender presence in most sectors declining only slightly.

In the industrial sector, which fared relatively well during the pandemic because of strong e-commerce activity, the number of active lenders grew by 20% over the course of the year, continuing to grow at the same pace it had since 2017, Costello wrote.

A notable difference between the COVID-19 downturn and the global financial crisis more than a decade earlier is "a functioning debt market with far higher levels of liquidity" in the present period, he added.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Bumper transactions

* Extended Stay America Inc. and its paired-share real estate investment trust ESH Hospitality Inc. agreed to be acquired by a 50/50 joint venture between funds managed by Blackstone Group Inc.'s Blackstone Real Estate Partners and Starwood Capital Group for about $6 billion. The transaction is expected to close in the second quarter.

* Alphabet Inc. unit Google LLC will invest more than $7 billion in offices and data centers across the U.S. in 2021 and create at least 10,000 new full-time jobs. More than $1 billion of the investment is earmarked for California, CEO Sundar Pichai said in a blog post.

* Office landlord Columbia Property Trust Inc. said it received a $19.50-per-share cash takeover proposal from an activist investor group including Arkhouse Partners LLC. The REIT said its board will "carefully evaluate the proposal to determine the course of action that it believes is in the best interest of the company and all Columbia stockholders."

* Global commercial real estate service provider Newmark Group Inc. got approval from the U.S. Bankruptcy Court for the District of Delaware for its planned acquisition of the business of flexible workspace provider Knotel Inc.

* Communications REIT American Tower Corp. entered into a master lease agreement with DISH Network Corp. that will enable the latter to lease space on up to 20,000 American Tower communications sites.

* Offerpad agreed to go public in a merger deal with special purpose acquisition company Supernova Partners Acquisition Co. Inc. that gives the real estate solutions provider a roughly $3.0 billion post-transaction equity value. The transaction is expected to close in the second or early third quarter.

* Sonesta International Hotels Corp. completed its acquisition of Red Lion Hotels Corp. The merger forms a global hotel company with about 1,200 locations, over 100,000 guest rooms and a 15-brand portfolio across various market segments.

* SmartStop Self Storage REIT Inc. completed its merger with fellow self-storage REIT Strategic Storage Trust IV Inc. in a roughly $380 million all-stock deal. The resulting consolidated self-storage portfolio totals 136 100%-owned properties and six joint venture properties with a combined gross book value of about $1.5 billion.

* GreenAcreage Real Estate Corp. and NewLake Capital Partners Inc. merged to form a cannabis real estate company with a 24-property portfolio across nine U.S. states. The entity boasts over $325 million in assets and more than $110 million in cash to fuel growth.

New targets

* Homebuilding giant Lennar Corp. formed an over $4 billion Upward America Venture platform to acquire single-family rental homes and townhomes across the U.S. from the company and potentially other homebuilders. Centerbridge Partners LP, Allianz Real Estate and other institutional investors led a $1.25 billion equity commitment for the platform initially.

* CIM Commercial Trust activist shareholders Lionbridge Capital LP and Robotti & Co. Advisors LLC urged the office REIT's board to evaluate strategic alternatives for the company to maximize stockholder value. The investors said any review must be led by fully independent directors.

* Cerberus Real Estate, an affiliate of Cerberus Capital Management LP, and Stonemont Financial Group LLC formed a joint venture to own a billion-dollar portfolio of logistics and outdoor storage industrial real estate across the U.S. The venture aims to target truck terminals; truck and trailer parking, repair and maintenance facilities; outdoor storage facilities; and other assets that aid last-mile distribution centers and warehouses.

Portfolio play

* U.S.-based data center REIT Digital Realty Trust Inc. sold a portfolio of 11 data centers in Europe to Singapore-based Ascendas Real Estate Investment Trust. The four U.K. assets in the portfolio sold for about £250.3 million, and the remaining seven assets across Europe fetched €276.9 million.

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